Fundamentally Speaking
Joel Karlin DTN Contributing Analyst

Thursday 09/20/12

U.S., Foreign, and Global Corn Stocks-to-Use Ratios

The USDA’s September crop production report was not nearly as bullish for corn as had been expected.

This has contributed to the recent slide in futures where the December 2012 corn contract is more than a $1.00 per bushel off its contract high.

Still, ending stocks as a percent of estimated total usage is pegged at 6.5% which, next to the 5.0% ratio posted in the 1995-96 marketing year, is the lowest ever.

This year’s figure is about half the 10-year average of 12.3%.

The global situation is also quite precarious with the 2012-13 stocks to use ratio estimated at 11.6% but that is just slightly lower than the low seen in recent years of 11.6% that was seen last year and also in the 2006-07 season.

Our records, which go back to 1960, do show that lower world corn stocks to use ratios were seen in prior years with all-time lows being posted at 9.8% in the 1972-73 season and 9.4% the following season.

This year’s world stocks to use ratio is also just modestly below the 10-year average of 11.2%.

Finally, the global corn stocks to use ratio less the U.S. is pegged at 17.5% for the 2012-13 season and that is almost equal to the 10-year average of 17.8% and down just modestly from the 18.7% stocks to use ratio the season prior.

Subtracting the U.S. figures from the world stocks to use ratio calculations highlights the fact that foreign corn production increased by 1.0% vs. the prior year whereas U.S. 2012 corn output is down a stunning 13.2% from the 2011 figure based on the September 12th report.

A very nice second corn crop in Brazil and record output this year in China are mostly responsible for higher foreign output.


Posted at 1:38PM CDT 09/20/12
Comments (1)
The September WASDE reports has the ending stocks to use ratios and ending stocks of 6.7%, 902; 6.8%, 866 and 6.5%, 733 for 2010-11, 2011-12 and 2012-13 respectfully. When looking at the July chart of the old years, July 2011 (2010-11 marketing year) moved generally higher from September through the contracts expiration. July 2012 chart (2011-12 marketing year) shows general price decline until the realization of this summer's drought and/or we ran out of corn, then it move quickly higher. The 2010-11 corn marketing year saw ending stocks decline 227 million bushels to a low of 675 or 5.0% of use than increased. In 2011-12 ending stocks declined 65 million bushels to 801 or 6.3% of use than increased. The July CME contracts expired around $7.25 for 2010-11 when the June WASDE was 880 or 6.6%. The July 2012 closed around $7.60 with June ending stocks of 903 or 7.2%. The July 2013 contract seems reasonably priced in the $7.40 range when compared to the prior two years at expiration. Year Sept Report Low June Price 2010-11 6.7% 902 5.0% 675 6.6% 880 $7.25 2011-12 6.8% 866 6.3% 801 7.2% 903 $7.60 2012-13 6.5% 733 $7.40 The 2012-13 marketing year would go to 5.0% of use or have an ending position around 570 million bushels if 168 million bushels of additional use occurs. The estimated 340 million bushels of new crop used in the old year should, at some point, work its way into the numbers. This could/should/might push prices back north. The reports of harvest lines at the elevators seem to indicate the grain is flowing the way the commercials would want it. All the very good reasons to let the corn go are there, one just gets the feeling that before the marketing year is over, prices could move to new highs. The move will more than likely be a grind up not a quick reward. One may only need to review ones own thoughts of our marketing performance for the 2011-12 marketing year to help find direction for marketing this year crop. That is only if the grain quality is there.
Posted by Freeport IL at 9:26PM CDT 09/24/12
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